Shares of hotel companies were in the limelight and rose as much as 14 percent in BSE in intraday trade on Monday in hopes of a trade revival following the unlocking of the economy and the rebound in travel. Management’s comment on the strong revival from July is encouraging and analysts believe business will return to pre-Covid level by the fourth quarter of fiscal 22, if there is not a third wave of the pandemic.
Among individual stocks, EIH, Taj GVK Hotels & Resorts and Chalet Hotels rallied between 10% and 14%. Indian Hotels Company (IHCL) rose 14 percent to hit a record high of Rs 169.20, on the BSE in intraday trading. The shares of the Tata Group company surpassed their previous high of Rs 164.10 touched on June 26, 2019.
Analysts remain positive about IHCL’s business recovery prospects due to its strong brand recall and presence in all segments, focus on light assets, repositioning of Ginger in the lean luxury segment and efficient cost management.
So far this September, IHCL’s share price has appreciated by 21 percent, after the company announced a Rs 3,000 crore fundraising plan through a rights issue. the company’s existing shareholders. The issue is intended to meet the company’s financing needs for capital expenditures, growth plans and debt repayment and will be finalized in consultation with commercial bankers, the company said.
Credit rating agency ICRA reaffirmed IHCL’s non-convertible bond program ratings of Rs 300 million on September 2 and revised the outlook from negative to stable. Long-term rating outlook revision influences likely improvement in IHCL’s capitalization metrics and cash flow position, following its recent fundraising announcement, ICRA said in rating justification .
The Tata Group owns a 40.75 percent stake in IHCL through Tata Sons (38.09 percent stake) and other Group companies. Tata Sons has demonstrated its financial support for IHCL over the years by subscribing to various capital raising activities of the company and ICRA hopes that the same will continue in the future, should it be necessary. The company also enjoys considerable financial flexibility and great convenience for lenders / investors by virtue of the Tata Group lineage.